Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: A request for information on a specific taxpayer.
Position: General comments on reasonable expectation of profits.
Reasons: Our files are confidential. Taxpayer is seeking support for refusing to complete income tax returns of clients which have questionable business expense claims.
XXXXXXXXXX 2000-001741
J. E. Grisé
Attention: XXXXXXXXXX
May 25, 2000
Dear Sirs:
This is in reply to your fax of March 22, 2000, requesting an investigation and information on a specific company.
The information our Agency has concerning specific taxpayers is confidential and cannot be disclosed.
Your fax seems mainly concerned with claims for income tax purposes of expenditures that are in the nature of personal or living expenses or associated with an activity or undertaking that has no reasonable expectation of producing profits. Personal or living expenses are specifically excluded in computing the income of a taxpayer from a business or property by virtue of paragraph 18(1)(h) of the Income Tax Act. Where an activity or undertaking has no reasonable expectation of producing profits, a business is not considered to have been carried on and any losses that resulted would not be deductible for income tax purposes. It is a question of fact as to whether or not a particular business has a reasonable expectation of profit.
We hope our comments are helpful.
Yours truly,
John Oulton
for Director
Business and Publications Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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